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CA Final · Financial Reporting · Consolidated Financial Statements

Veda Industries Ltd prepares consolidated financial statements for the year ending 31 March. Its subsidiary, Kiran Components Ltd, has a reporting date of 31 December, and it is impracticable for Kiran to prepare additional financial statements as at 31 March. Which treatment is consistent with Ind AS 110?

Veda should consolidate Kiran's latest statements as at 31 December, adjusted for significant transactions or events up to 31 March. The date difference must not exceed three months, and the period length and gap must stay the same from period to period.

  1. AConsolidate Kiran's most recent financial statements, adjusted for significant transactions or events between 31 December and 31 March, provided the date gap is no more than three monthsCorrect
  2. BExclude Kiran from consolidation until it aligns its reporting date with that of Veda
  3. CConsolidate Kiran's 31 December statements without any adjustment, since the gap is within three months
  4. DConsolidate Kiran using its statements only if the gap is not more than six months, with adjustments for significant events

Explanation

Where preparing additional statements is impracticable, the parent uses the subsidiary's most recent statements adjusted for significant transactions or events up to the consolidated reporting date. The gap must be no more than three months (here exactly three months). Using the statements unadjusted ignores the required adjustments, and a six-month limit is not in the standard.

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